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The First American Corporation Reports Results for the Second Quarter 2006

July 26, 2006

SANTA ANA, Calif., -- The First American Corporation (NYSE: FAF) today announced results for the second quarter ended June 30, 2006:



Three Months Ende June 30 Six Months Ended June 30
2006 (A) 2005 (B) 2006 (A) 2005 (B)
Total revenues $2.17 billion $1.98 billion $4.17 billion $3.69 billion
Income before income taxes
and minority interests
$220.7 million $265.6 million $358.4 million $419.3 million
Net income $114.7 million $139.5 million $184.4 million $218.7 million
Net income per diluted share $1.16 $1.43 $1.86 $2.27
(A) Results for the three and six months ended June 30, 2006, include a $22.0 million pretax charge, $13.7 million, or $0.14 per diluted share on an after-tax basis, for certain title insurance regulatory/litigation matters.
(B) Results for the three and six months ended June 30, 2005, include a $6.0 million pretax charge, $3.4 million, or $0.03 per diluted share on an after-tax basis, merger and relocation-related charges at First Advantage Corporation.


"Second quarter revenues were $2.17 billion, an increase of 9 percent over the same quarter of 2005, setting an all-time company high for second quarter revenues," stated Parker S. Kennedy, chairman and chief executive officer of The First American Corporation. "Year-to-date revenues of $4.17 billion increased 13 percent over the same period last year and also set an all-time company high for first-half-of-the-year revenues. This growth in revenues was achieved despite a drop in mortgage originations."

Summary of Operations

Mortgage originations decreased in the second quarter of 2006 when compared with the same period of the prior year. However, as a result of increases in market share and in the average revenues per title order closed at the company's title insurance operations, as well as acquisition activity and organic growth at the company's specialty insurance, property information, and risk mitigation and business solutions segments, total operating revenues increased when compared with the second quarter of 2005. Though strong, profits for the second quarter of 2006 did not keep pace with the revenue growth. Factors affecting results included a quarter-over-quarter increase in the loss provision rate for the title insurance operations, a $22.0 million charge for certain title insurance regulatory/litigation matters and continued investments in new business initiatives. Operating revenues for the three and six months ended June 30, 2006, were $2.10 billion and $4.05 billion, respectively. Operating revenues for the three and six months ended June 30, 2005, were $1.92 billion and $3.59 billion, respectively. Net income for the three and six months ended June 30, 2006, was $114.7 million, or $1.16 per diluted share, and $184.4 million, or $1.86 per diluted share. Net income for the three and six months ended June 30, 2005, was $139.5 million, or $1.43 per diluted share, and $218.7 million, or $2.27 per diluted share, respectively.

Operating Revenues (in thousands)
Three Months
Ended June 30
Six Months
Ended June 30
   
2006 2005 2006 2005
         
Financial Services Title Insurance and Services:        
--- Direct operations $806,979 $740,203 $1,492,301 $1,352,220
--- Agency operations 747,685 681,354 1,488,064 1,281,101
1,554,664 1,421,837 2,980,365 2,633,321
         
Specialty Insurance 77,181 63,785 151,754 124,294
1,631,845 1,485,622 3,132,119 2,757,615
Information Technology Mortgage Information 137,643 150,499 272,069 292,972
--- Property Information 144,649 131,834 279,550 246,627
--- Risk Mitigation and Business Solutions 204,470 161,253 398,191 299,443
486,762 443,586 949,810 839,042
         
---Eliminations (18,194) (4,309) (29,543) (8,200)
         
Total operating revenues $2,100,413 $1,924,899 $4,052,386 $3,588,457

Source: First American Corporation Corporation



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